TIDMETX
RNS Number : 8097R
e-Therapeutics plc
05 March 2019
e-therapeutics plc
Results for the year ended 31 January 2019
Secured first commercial deal and continued expansion of
Network-Driven Drug Discovery platform capabilities
5 March 2019: e-therapeutics plc (AIM: ETX, "e-therapeutics"),
the network-driven drug discovery ("NDD") company, announces its
full year results for the year ended 31 January 2019.
Highlights
SECURED FIRST COMMERCIAL DEAL ON NDD PLATFORM
-- Signed commercial research collaboration deal with Novo Nordisk in its core disease area of type-2 diabetes
-- Important validation of e-therapeutics and its technologies
-- Business development activities continue with a number of discussions progressing on a range of
revenue-generating and value-creating deals
ESTABLISHED PARTNERSHIPS DELIVERING
-- Further developed network-driven drug discovery ("NDD") platform with a strong focus on the application to
generate useful, actionable insight from genomic data
-- Successful initial work in Parkinson's Disease in collaboration with C4X Discovery identified potential new
disease mechanisms
-- Collaborations with Biorelate and Intellegens have been augmenting core NDD platform capabilities and adding to
e-therapeutics' already rich pool of biological data
EXCITING RESULTS DEMONSTRATING POTENTIAL OF NDD PLATFORM TO
TRANSFORM DRUG DISCOVERY
-- In-house work on patient segment-specific NDD work in breast cancer delivered promising results
-- Application of NDD platform to highly industry-relevant target deconvolution and mechanism of action (MoA) work
on complex diseases
-- Creation of new Genome Associated Interaction Networks ("GAINs") functionality to better understand population
genetic data
PROGRESS ON EXISTING AND NEW DISCOVERY PROGRAMMES IN COMPLEX
DISEASES WHERE THERE IS SIGNIFICANT UNMET NEED
-- Continued progress on two immuno-oncology programmes driving external discussions on capital efficient means to
fund further work
-- Creation of new partner-ready programmes in neurodegeneration, fibrosis and tumour microenvironment also driving
business development discussions
Financial highlights
-- Revenues of GBP0.04m (FY18: GBPnil)
-- Cash and deposits at 31 January 2019 of GBP5.9m (FY18: GBP9.6m)
-- Cash and deposits reduction in the year of GBP3.7m (FY18: GBP4.4m)
-- Operating loss of GBP5.1m (FY18: loss of GBP6.8m)
-- R&D tax credit of GBP1.1m (FY18: GBP1.4m)
Ray Barlow, CEO of e-therapeutics, said:
"During the year we continued to make good operational progress
and began to realise the full potential of our NDD platform and
approach. We secured our first commercial deal with Novo Nordisk in
type 2-diabetes, continued to develop and invent new assets and
programmes in commercially-relevant areas and we generated new
NDD-based innovation in the highly attractive field of functional
genomics.
In executing our plans, we have managed our cash and resources
carefully to nurture our core business and to enable us to continue
to offer a range of assets and capabilities to the industry. We
remain focused on our extensive business development efforts and
are in a number of detailed discussions with potential partners.
Confident in the broad versatility and utility of the NDD platform,
we remain focused on translating this into value for our
shareholders."
Iain Ross, Chairman of e-therapeutics, added:
"e-Therapeutics has continued to successfully deliver on its
commitment to progress its unique NDD platform and the assets
derived from it.
In addition to achieving commercial validation of the NDD
platform, the Company also created a range of new and potentially
valuable options for monetisation of the overall NDD approach.
Over the coming year, in order to fully exploit all its assets
and capabilities, we will continue to look at alternative sources
of funding, including broader industry partnerships, 'shared
funding' approaches and, if appropriate, M&A. We look forward
to maintaining an open dialogue with our shareholders as we execute
our strategy over the year ahead."
-Ends-
For more information, please contact:
e-therapeutics plc Tel: +44 (0)1993 883 125
Iain Ross, Chairman www.etherapeutics.co.uk
Ray Barlow, Chief Executive Officer
Steve Medlicott, Finance Director
Numis Securities Limited Tel: +44 (0) 207 260 1000
Michael Meade/Freddie Barnfield (Nominated www.numis.com
Adviser)
James Black (Corporate Broking)
FTI Consulting Tel: +44 (0) 203 727 1000
Simon Conway/Brett Pollard Email: e-therapeutics@fticonsulting.com
About e-therapeutics
We are an Oxford, UK-based company with a unique and powerful
computer-based drug discovery platform and a specialised approach
to network biology.
Our novel network-driven methodology allows us to discover new
and better drugs in a more efficient and effective way.
We use our highly productive drug discovery engine to develop
our own IP-protected, pre-clinical drug discovery programmes which
will be of interest to partners looking to acquire or in-license
novel and differentiated assets. We are currently developing two
programmes in immuno-oncology and have a number of partner-ready
projects in areas such as neurodegeneration, fibrosis and tumour
microenvironment.
Because of our novel network-driven drug discovery ("NDD")
approach, we believe there is potential to enter into several
different types of collaborative partnerships with biotech, pharma
and other technology companies to create sustainable mutual
value.
About Network-Driven Drug Discovery ("NDD")
e-therapeutics' proprietary NDD platform comprises a suite of
powerful computational tools to augment and interrogate the vast
amount of biological information currently available in both public
and private databases.
Our NDD platform is founded on sophisticated network science and
employs techniques such as machine learning, artificial
intelligence and state-of-the-art data analysis tools. Using our
biological expertise, we can create and analyse network models of
disease to identify likely proteins that could effectively be
disrupted to treat the disease.
We believe that our network-driven approach more realistically
reflects the true complexity of disease, with its multiple and
often interconnected cellular pathways. By modelling and analysing
disease networks and considering the pattern of connections between
proteins, and not just single pathways, we more efficiently select
the very best drug-like compounds for screening and for subsequent
medicinal chemistry and pre-clinical testing. With our novel
methodology, significant numbers of active molecules can be
identified and tested quickly. Our approach is highly productive
and consistently generates hits that have been progressed into
potent, selective and novel drug molecules.
Our overall aim is to discover more efficacious drugs more
effectively. By using more biologically realistic, cell and
tissue-based assays we can choose and design compounds that are
more likely to translate into better, more clinically efficacious
drugs.
Chairman's Statement
e-therapeutics has made substantial progress during the
financial year under review. We continue to operate a lean and
effective organisation in a highly competitive and dynamic sector.
In particular, we have continued to progress our existing assets,
established new collaborations with C4X Discovery and Novo Nordisk,
and have made progress in our collaborations with Biorelate and
Intellegens, which together have further enhanced our platform and
capabilities.
Our new in-house work on using the Network-driven drug discovery
("NDD") approach to address significant opportunities in functional
genomics is particularly exciting.
Most recently we were pleased to announce a significant
collaboration with Novo Nordisk and we anticipate announcing
further collaborations over the coming year. We have created a
broad range of assets and capabilities and are looking at a number
of different commercial deals, all with the potential to provide
additional revenues for the business and to build value for our
shareholders.
It has been a challenging year in terms of external financial,
regulatory and political uncertainty. e-Therapeutics has continued
to deliver on its strategy to develop and enhance its unique and
robust NDD platform. Ultimately this has only been achieved by
exercising strict financial prudence throughout the year, and
prioritising and focusing our resources on the development of the
NDD platform. By necessity, and in the absence of actively seeking
additional funding, we have not been able to fully exploit and
invest in our in-house NDD-derived project assets.
As a consequence, the Board is now evaluating alternative
sources of capital, including through more extensive collaborations
and 'shared funding' projects. Whilst some of these initiatives may
result in the Group having to share the potential overall upside
with third parties, they will enable us to progress our NDD-derived
programmes and increase the overall probability of success,
maximising the creation of shareholder value. In addition, we
intend to continue our focus on corporate and business development
activities and the monetisation of our assets and capabilities.
Furthermore, we remain alert to all opportunities including, if
appropriate, M&A.
Your Board remains convinced of the importance, value and
utility of e-therapeutics and its technology, and accordingly we
will continue to aim to create and realise that value for our
shareholders.
In summary, as planned during the year, e-therapeutics
successfully progressed the development of its unique NDD platform
and secured further validating third party collaborations. Over the
coming year, in order to fully exploit all its assets and
capabilities, the Group will look to form broader industry
partnerships and to secure additional funding to ensure sustainable
success.
Finally, I would like to extend my thanks to my Board and
management colleagues and to the staff for their continuing
commitment.
Iain G Ross
Non-Executive Chairman
4 March 2019
Chief Executive Officer's Statement
I am pleased to provide this statement on e-therapeutics'
progress for the 2018/19 financial year. This time last year, we
communicated that there was a clear need for our NDD technologies
and assets, which provide a clear solution to some of the
industry's most pressing needs. We also articulated a clear plan to
continue the turnaround of the business, to engage with potential
partners and to create a business that could be highly valued by
the healthcare industry. We detail below how we continue to execute
diligently against these strategic and tactical plans. We note the
progress we have made during the year and highlight how we intend
to move the business forward.
Strategy and business plan
Investments in the period have been focused on the business plan
we announced last year, which is founded on three main pillars:
1. Creating and licensing partner-driven NDD-derived programmes
2. Out-licensing of our own NDD-derived assets
3. Continuously updating and enhancing our NDD platform.
As detailed below, we believe there is an opportunity to
monetise some of the new functionalities we have created for the
NDD platform.
Partner-driven NDD-derived programmes
In the interim release in October 2018 we highlighted work we
had carried out during the year in disease areas such as
neurodegeneration, fibrosis and immuno-oncology. This new work
leverages our expertise in network biology and creates new
opportunities in industry-relevant and potentially high value
discovery areas.
Some of these programmes, which did not exist until recently,
were the subject of several discussions with potential partners
during the year. Business development work in this area continues
and we were pleased to announce our first commercial deal in
forming a research collaboration with Novo Nordisk in its core area
of type-2 diabetes in December 2018. This is the first time we have
applied the NDD approach into metabolic disease and this also
demonstrates our ability to go from concept to a partner-ready
programme in a matter of months. We look forward to providing an
update on the progress of this collaboration in due course.
The fact that we passed deep level due diligence with a
respected world leader in a new area is a good indication of the
quality and substance of our NDD approach. This deal also further
demonstrates the versatility of the NDD platform to address
diseases of great relevance to society, medicine and the
industry.
As highlighted in my review of last year, one of the challenges
of a highly productive platform is to have sufficient funds to
invest in all the NDD-derived programmes we have created. As a
result, it has been necessary to create partnerships with the
industry at an earlier stage than ideal to seek commercial funding
and validation. To this end, business development continues to be a
core part of our corporate strategy and we hope to be able to
announce a number of additional collaborations during the coming
financial year.
Self-funded NDD-derived assets
As part of the strategic review we conducted in 2017, we decided
to focus the core of our internal investment on two NDD-derived
assets in the immuno-oncology area: Tryptophan Catabolism and
Immune Checkpoint Modulation.
We continue to make progress in our Tryptophan Catabolism
programme. As previously noted, our lead series are novel, potent,
first-in-class compounds that work by a different Mechanism of
Action ("MoA") to the existing IDO or TDO inhibitors. We are
currently undertaking further in vivo work to show how our novel
MoA can impact the underlying therapeutic approach, particularly in
combination with approved and marketed checkpoint inhibitors.
In our Immune Checkpoint Modulation programme, we have continued
to explore the two classes of novel compounds which we know are
acting by two distinct immunological mechanisms. We have continued
to test efficacy across a range of T-cell driven tumour cell
killing assays and to attempt to further deconvolve their
biological targets.
Given our need to continue to fully support our core NDD
platform and capabilities, we have not been able to invest as
heavily in these projects as we would have ideally liked, and the
current reality remains that we will need to identify and secure
incremental funds if we wish to take these programmes forward into
the more expensive candidate selection and IND-enabling stages of
development. As detailed in the Chairman's Statement, we are
looking at a range of alternative funding routes for these assets
at the moment.
Monetising our NDD platform
In order to maintain our competitive position, we continuously
need to improve and evolve our core skills and capabilities.
Accordingly, during the year we continued to invest in the
augmentation of the NDD platform.
We are particularly excited by the work we have done using our
NDD approach to interrogate human genomic data. We are very
encouraged by the work we have done in-house in patient
segment-specific NDD work, which we exemplified using breast cancer
data from patients. We have presented this externally now on a
number of occasions and have received positive reactions.
On 8 December 2018, we announced we had successfully completed
the initial phase of our work on Parkinson's Disease in
collaboration with C4X Discovery ("C4XD"). Using NDD we have been
able to interrogate human genetic data from ca.200 PD-associated
genes derived from C4XD's Taxonomy3 technology. This enabled us to
confirm the centrality of a number of known mechanisms in
Parkinson's Disease and, very importantly, identify potentially
completely novel mechanisms. We are currently in discussions with
C4XD to see how we can extend this initial work to exploit the
synergy between technological approaches.
We believe that this approach is applicable to population
genetic data for a multitude of other diseases and are marketing
this innovation as GAINs ("Genome-Associated Interaction
Networks"). We are looking to further explore the opportunity
created by this development, as it directly addresses some of the
key challenges the industry faces in linking genetic data to
underlying disease mechanisms and phenotype.
Our other ongoing collaborations have also contributed to the
development of our skills and capabilities. On 15 January 2018, we
announced two collaborations with highly innovative AI companies.
These collaborations give us unique access to a number of
state-of-the art AI and machine learning techniques. We previously
highlighted the contribution of our Biorelate collaboration where
we have successfully used its AI-based natural language processing
("NLP") techniques to extract useful, structured biological
information to help inform our NDD-derived fibrosis projects. We
have also advanced our own machine learning capabilities and are
progressing with the integration of Intellegen's neural network
approach to create new, potentially proprietary, predicted
biological data that will be useful in our existing and new NDD
projects.
Finally, based on the progress in these areas, we now consider
there to be an opportunity to monetise some of the innovations
which we have created. As such, we are currently finalising
marketing materials for distribution to existing and new contacts
that may provide a means for us to generate revenues.
Cost control
We continue to manage our cash resources very carefully and, as
a consequence, earlier in the year we took the decision to slow our
investment in the self-funded NDD-derived assets. This decision was
based on the capital we have available and our overarching aim to
ensure we can maintain our core NDD platform and capabilities to
enable us to offer the full gamut of our capabilities to commercial
partners.
We do consider that the data we have generated on the Tryptophan
Catabolism and Immune Checkpoint Modulation projects are
commercially attractive and the programmes are fundable. In order
to explore non-dilutive sources of funding, we are in detailed
discussions with parties who are potentially willing to fund the
next stages of development of these (and other) programmes in
exchange for a proportion of downstream economics. We continue to
consider this as a way to progress our other discovery projects in
a capital-efficient manner.
As highlighted in my statement last year, we wish to invest
further in our assets and continue the current business model into
the medium term; therefore we need to identify additional funds. To
raise our international profile, during the year, we completed a
first round of non-deal investor roadshows in the USA, mainland
Europe, China and Hong Kong. Our plan was to introduce new
investors to the Company who, in the future, may wish to
participate in the growth of the business. Generally, our
technologies were well received and, as the level of industrial
validation of the Company increases, we will have a sound basis to
re-engage with this investor base if we so choose.
As outlined in our interim results, we are now proactively
considering inorganic growth options. Accordingly, we continue to
actively assess prospects that have the potential to add
significant value by enabling further augmentation of our core
technology platform or providing downstream skills, capabilities or
cash to further develop NDD-derived assets.
Outlook
During the year, we completed our first commercial transaction
with Novo Nordisk, a world-leading healthcare company. This was an
important validating milestone for e-therapeutics and its
technologies. We are constantly looking to create industry-relevant
innovation by augmenting our core NDD platform and using our
network biology expertise to create new opportunities for the
business.
We continue to execute a systematic, comprehensive and
wide-ranging business development exercise which forms the
foundation of a number of ongoing discussions with potential
partners.
During the year, we anticipated that the capital markets would
become more challenging for a business of our scale, especially due
to macroeconomic and political forces. As such, we took the prudent
decision to concentrate our available resources on our core
platform, assets and activities whilst seeking non-dilutive sources
of capital. In doing so, we have extended our cash runway but
remain open to means to progress our promising NDD-derived
programmes, especially via partnership and non-dilutive
sources.
Our NDD platform is addressing clear drug discovery challenges
and has the potential to transform and accelerate drug development.
We are confident of its broad versatility and utility and remain
focused on means to translate this into value for our shareholders.
We look forward to maintaining an open dialogue with our
shareholders during the coming year.
Ray Barlow
Chief Executive Officer
4 March 2019
Financial review
As outlined in the Chief Executive Officer's Statement, we were
pleased to report our first commercial deal in December 2018 with
Novo Nordisk in the area of type-2 diabetes. Whilst the financial
terms were not disclosed, we confirmed that the research
collaboration agreement would last for a period of up to 12 months.
Work commenced in January 2019 and accordingly, to reflect the
level of work done, we have reported associated revenues of
GBP0.04m in the year to 31 January 2019 (2018: GBPnil).
The overall operating loss for the year was GBP5.1m (2018: loss
of GBP6.8m). The loss reported in the second half of the year of
GBP2.3m (H2 2018: GBP3.1m) reflects a three-year trend of
sequentially declining six-monthly losses and was the lowest
half-yearly loss since 2012. This reduced loss reflects lower
external spend on our self-funded NDD-derived assets in the period,
but also continued strong focus on cost control across the whole
Group.
R&D spend for the year of GBP3.7m (2018: GBP5.0m) was
GBP1.3m lower than the prior year. The last remaining clinical
trial, ETS2101, ended in August 2018 and this, combined with
reduced spend on the self-funded assets, accounted for the majority
of the reduction in R&D spend.
Administrative costs in the year of GBP1.5m (2018: GBP1.7m)
continue to decline, primarily due to a reduction in people
costs.
Year end cash and cash equivalents were GBP5.9m (2018: GBP9.6m).
The cash reduction for the year as a whole was GBP3.7m (2018:
GBP4.4m). After adjusting for the R&D tax credit of GBP1.4m
(2018: GBP3.0m) the underlying cash burn of GBP5.1m was in line
with the operating loss. This compares with an underlying cash burn
in the prior year of GBP7.4m.
In the second half of the year, the cash reduction of GBP1.7m
was the lowest half yearly burn rate since 2011. It is important to
be aware that whilst we are continually looking at all costs, we
have continued and will continue to invest in both core NDD
platform functionality and the self-funded assets. The decision to
increase investment in the platform was made over two years ago and
this is evidenced by the advances we have made over the last 12
months in patient-specific segmentation, our proprietary database
expansion and the recent C4X Discovery collaboration.
Notwithstanding the fact that we will continue to invest within
both the platform and the self-funded assets, we anticipate a
further, more modest, reduction in operating loss in the current
year.
We are anticipating claiming an R&D tax credit of GBP1.1m
for the current financial year. Combined with our year end cash
position and based on the second half cash consumption exit rate,
we maintain our expectation that we will have sufficient cash to
continue core operations into late 2020. However, as always, this
will need to be evaluated if we wish to invest in further
experimental validation of new NDD-derived programmes or later
stage preclinical work.
Steve Medlicott
Finance Director
4 March 2019
Consolidated Income Statement
For the year ended 31 January 2019
2019 2018
Notes GBP000 GBP000
-------------------------------------- ------ -------- --------
Revenue 44 -
Cost of sales - -
-------------------------------------- ------ -------- --------
Gross profit 44 -
Research and Development expenditure (3,673) (5,019)
Administrative expenses (1,485) (1,749)
Operating loss (5,114) (6,768)
Investment income 29 49
Loss before tax (5,085) (6,719)
Taxation 5 1,086 1,360
-------------------------------------- ------ -------- --------
Loss for the year attributable to
equity holders of the Company (3,999) (5,359)
-------------------------------------- ------ -------- --------
Loss per share - basic and diluted 6 (1.49)p (2.00)p
-------------------------------------- ------ -------- --------
Consolidated Statement of Comprehensive Income
For the year ended 31 January 2019
2019 2018
GBP000 GBP000
-------------------------------------------- -------- --------
Loss for the financial year (3,999) (5,359)
Other comprehensive income - -
-------------------------------------------- -------- --------
Total comprehensive loss for the financial
year (3,999) (5,359)
-------------------------------------------- -------- --------
Consolidated Statement of Changes in Equity
For the year ended 31 January 2019
Share Share Retained
capital premium earnings Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- --------- --------
As at 1 February 2017 268 65,143 (49,431) 15,980
Total comprehensive income for year
Loss for the nancial year - - (5,359) (5,359)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (5,359) (5,359)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares 1 11 - 12
Equity-settled share-based payment transactions - - 105 105
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners 1 11 105 117
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2018 269 65,154 (54,685) 10,738
Total comprehensive income for year
Loss for the nancial year - - (3,999) (3,999)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (3,999) (3,999)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 11 - 11
Equity-settled share-based payment transactions - - 52 52
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners - 11 52 63
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2019 269 65,165 (58,632) 6,802
------------------------------------------------------- -------- -------- --------- --------
Company Statement of Changes in Equity
For the year ended 31 January 2019
Share Share Retained
capital premium earnings Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------------------- -------- -------- --------- --------
As at 1 February 2017 268 65,143 (46,873) 18,538
Total comprehensive income for year
Loss for the nancial year - - (5,347) (5,347)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (5,347) (5,347)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares 1 11 - 12
Equity-settled share-based payment transactions - - 105 105
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners 1 11 105 117
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2018 269 65,154 (52,115) 13,308
Total comprehensive income for year
Loss for the nancial year - - (3,997) (3,997)
------------------------------------------------------- -------- -------- --------- --------
Total comprehensive loss for year - - (3,997) (3,997)
------------------------------------------------------- -------- -------- --------- --------
Transactions with owners, recorded directly in equity
Issue of ordinary shares - 11 - 11
Equity-settled share-based payment transactions - - 52 52
------------------------------------------------------- -------- -------- --------- --------
Total contributions by and distribution to owners - 11 52 63
------------------------------------------------------- -------- -------- --------- --------
As at 31 January 2019 269 65,165 (56,060) 9,374
------------------------------------------------------- -------- -------- --------- --------
Balance Sheets
As at 31 January 2019
Group Company
-------------------- --------------------
2019 2018 2019 2018
Notes GBP000 GBP000 GBP000 GBP000
-------------------------------- ------ --------- --------- --------- ---------
Non-current assets
Intangible assets 7 119 135 2,943 2,959
Property, plant and equipment 8 42 71 42 71
161 206 2,985 3,030
-------------------------------- ------ --------- --------- --------- ---------
Current assets
Tax receivable 1,098 1,364 1,098 1,364
Trade and other receivables 18 91 18 89
Prepayments 328 504 328 504
Fixed-term deposits - 2,500 - 2,500
Cash and cash equivalents 5,904 7,097 5,904 7,097
-------------------------------- ------ --------- --------- --------- ---------
7,348 11,556 7,348 11,554
-------------------------------- ------ --------- --------- --------- ---------
Total assets 7,509 11,762 10,333 14,584
-------------------------------- ------ --------- --------- --------- ---------
Current liabilities
Trade and other payables 501 1,024 753 1,276
Contract liabilities 206 - 206 -
-------------------------------- ------ --------- --------- --------- ---------
Total liabilities 707 1,024 959 1,276
-------------------------------- ------ --------- --------- --------- ---------
Net assets 6,802 10,738 9,374 13,308
-------------------------------- ------ --------- --------- --------- ---------
Equity
Share capital 9 269 269 269 269
Share premium 65,165 65,154 65,165 65,154
Retained earnings (58,632) (54,685) (56,060) (52,115)
-------------------------------- ------ --------- --------- --------- ---------
Total equity attributable to
equity holders of the Company 6,802 10,738 9,374 13,308
-------------------------------- ------ --------- --------- --------- ---------
Statements of Cash Flow
For the year ended 31 January 2019
Group
------------------
2019 2018
Notes GBP000 GBP000
------------------------------------------- ------ -------- --------
Loss for the year (3,999) (5,359)
Adjustments for:
Depreciation, amortisation and impairment 7,8 73 72
Investment income (29) (49)
Equity-settled share-based payment
expenses 52 105
Taxation (1,086) (1,360)
------------------------------------------- ------ -------- --------
Operating cash flows before movements
in working capital (4,989) (6,591)
Decrease in trade and other receivables 252 145
Decrease in trade and other payables (317) (927)
Tax received 1,352 2,968
------------------------------------------- ------ -------- --------
Net cash used in operating activities (3,702) (4,405)
------------------------------------------- ------ -------- --------
Interest received 26 86
Acquisition of subsidiary - -
Acquisition of property, plant and
equipment 8 (8) (66)
Acquisition of other intangible assets 7 (20) (5)
Decrease in xed-term deposits 2,500 7,000
------------------------------------------- ------ -------- --------
Net cash from investing activities 2,498 7,015
------------------------------------------- ------ -------- --------
Net proceeds from issue of share capital 11 12
------------------------------------------- ------ -------- --------
Net cash from nancing activities 11 12
------------------------------------------- ------ -------- --------
Net (decrease)/increase in cash and
cash equivalents (1,193) 2,622
Cash and cash equivalents at 1 February 7,097 4,475
------------------------------------------- ------ -------- --------
Cash and cash equivalents at 31 January 5,904 7,097
------------------------------------------- ------ -------- --------
Notes
1. Status of Audit
The financial information presented in this statement does not
constitute the Company's statutory accounts for the year ended 31
January 2019 or the year ended 31 January 2018 but is derived from
those accounts. Statutory accounts for the year ended 31 January
2018 have been delivered to the Registrar of Companies and those
for the year ended 31 January 2019 will be delivered following the
Company's Annual General Meeting. The Auditors have reported on
those accounts; their reports were unqualified, did not draw
attention to any matters by way of emphasis without qualifying
their reports, and did not contain statements under s498(2) or (3)
of the Companies Act 2006.
2. Basis of preparation
While the financial information included in this preliminary
announcement has been prepared in accordance with the recognition
and measurement criteria of International Financial Reporting
Standards, as adopted by the European Union (EU) ("IFRS"), this
announcement does not in itself contain sufficient information to
comply with IFRS. This preliminary announcement has been prepared
using the accounting policies that are expected to be published in
the Group's accounts for the year ended 31 January 2019, which are
consistent with the accounting policies published in the Group's
accounts for the year ended 31 January 2018 and that are available
on the Company's website at www.etherapeutics.co.uk, with the
exception of those new standards, interpretations and amendments
which became effective during the year and were adopted by the
Group, albeit with no impact on the Group's loss for the year or
equity.
This announcement contains forward-looking statements that are
based on current expectations or beliefs, as well as assumptions
about future events. These forward-looking statements can be
identified by the fact that they do not relate only to historical
or current facts. Forward-looking statements often use words such
as anticipate, target, expect, estimate, intend, plan, goal,
believe, will, may, should, would, could, is confident, or other
words of similar meaning. Undue reliance should not be placed on
any such statements because they speak only as at the date of this
document and, by their very nature, they are subject to known and
unknown risks and uncertainties and can be affected by other
factors that could cause actual results, plans and objectives, to
differ materially from those expressed or implied in the
forward-looking statements. There are a number of factors which
could cause actual results to differ materially from those
expressed or implied in forward-looking statements. The Company
undertakes no obligation to revise or update any forward-looking
statement contained within this announcement, regardless of whether
those statements are affected as a result of new information,
future events or otherwise, save as required by law and
regulations.
Going concern
The Group recognised revenue from its first commercial deal
during the year, yet is currently still largely reliant on its
existing cash resources to fund ongoing operations. The primary
focus of the management is on establishing additional commercial
collaborations during the coming financial year. The Group is in
late stage discussions with a number of well-known pharma and
biotech potential partners. It is anticipated that such discussions
will be income generating and will provide both non-dilutive
funding and commercial validation.
As at 31 January 2019 the Group reports cash and liquid
resources of GBP5,904,000 and an underlying cash burn during the
year, excluding discretionary spend and development closure costs,
of GBP3,902,000. The Directors have prepared a detailed financial
forecast for the next two financial years. This forecast assumes no
further sales and the continuation of costs associated with drug
discovery. The impact of Brexit has been considered and management
believe that there will be minimal to no impact other than the
impact on UK GDP.
These financial forecasts assume that the existing structure and
functionality of the Group is maintained and that investment in
both the in silico platform and discovery assets will continue.
However, the Group is continually reviewing discretionary costs
across all areas of the business, as evidenced by the fact that the
six-monthly reported loss before tax has declined sequentially over
the last two years. The Directors anticipate that the coming
financial year will see a similar trend of an ongoing reduction in
costs, albeit at perhaps a more modest rate.
Present projections suggest that, in the absence of additional
revenue and excluding receipt of the anticipated R&D tax credit
of GBP1,098,000, the Group's cash resources will last until July
2020. At the date of preparation of this preliminary announcement,
the Group anticipates that the R&D tax credit will be received
and therefore has been recognised as receivable at the year end.
Assuming the receipt of this R&D tax credit as planned, cash is
forecast to last until October 2020.
It is possible to make material cost reductions in addition to
those included in the financial forecasts. It is the intention of
the Directors to call on these measures if required to extend cash
runway. It should also be noted that the forecasts have been
prepared assuming no future cash receipt from either dilutive
funding or from existing or future collaboration partners. The
Directors believe that current collaboration discussions will
result in a material cash inflow during the coming financial year.
Such cash receipts would extend the cash runway of the Group.
As a result of the above points, this preliminary announcement
and the financial statements for the year ended 31 January 2019
have been prepared on the going concern basis since the Directors
have a reasonable expectation that the parent Company and the Group
have adequate resources to continue in operational existence for
the foreseeable future.
3. Accounting judgements and sources of estimation uncertainty
The preparation of financial statements requires the Directors
to make judgements, estimates and assumptions that may affect the
application of accounting policies and the reported amounts of
assets and liabilities and income and expenses. The estimates and
underlying assumptions are reviewed on an ongoing basis.
The following are the key judgements that the Directors have
made in the process of applying the Group's accounting policies and
that have the most significant effect on the amounts recognised in
this preliminary announcement and the financial statements for the
year ended 31 January 2019:
-- The Directors consider the continued adoption of the going
concern basis appropriate, as discussed further in Note 2 of this
preliminary announcement.
-- The fair value of share options is calculated using the Monte
Carlo model with an input volatility based on historical share
price data over a period commensurate with the expected term of the
options awarded. Historical volatility may not be indicative of
future volatility, yet management judge this to be the most
appropriate method of calculation. Given the share option expense
of GBP52,000 (2018: GBP105,000), the volatility methodology used is
not expected to have a material impact on these financial
statements.
-- Revenue from collaborative partnerships is spread over the
expected life of the project. Management estimate project progress
at each reporting date, with consideration to project plans
outlined in customer contracts, and re-measure revenue accordingly.
Given the revenue recognised during the year of GBP44,000 (2018:
GBPnil), any overruns or underruns within the constraints of the
individual contracts with customers would not be expected to have a
material impact upon this preliminary announcement or the financial
statements for the year ended 31 January 2019.
The following are the key assumptions concerning estimation
uncertainty that may have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within
the next financial year:
-- Intangible assets and goodwill have been reviewed for
impairment and, as a result, an impairment charge of GBP19,000
(2018: GBP10,000) was recognised. Further details of this testing
can be found in Note 7.
-- The current tax receivable of GBP1,098,000 (2018:
GBP1,364,000) as disclosed in Note 5, represents an R&D tax
credit based on an advance claim with HMRC. The final receivable is
subject to judgement and the correct application of complex R&D
tax rules. The minimum receipt approved by HMRC could be GBPnil.
Historically, claims have been successful, and the Group expects
the current year claim to be successful too.
4. Staff numbers
The average number of persons employed by the Group and the
Company (including Executive Directors and excluding Non-Executive
Directors) during the year, analysed by category, was as
follows:
Number of employees
Group and Company
2019 2018
--------------------------------------------- ---------- ----------
R&D Staff 14 15
Finance and administration staff 2 3
Executive Directors 2 2
--------------------------------------------- ---------- ----------
18 20
--------------------------------------------- ---------- ----------
5. Taxation
Recognised in the Income Statement: 2019 2018
GBP000 GBP000
---------------------------------------------- -------- --------
Current tax income
R&D tax credit receivable for the current
year (1,095) (1,364)
Adjustments for prior year in respect of R&D
tax credit 9 4
----------------------------------------------- -------- --------
Current tax credit (1,086) (1,360)
----------------------------------------------- -------- --------
Deferred tax - -
---------------------------------------------- -------- --------
Total on loss on ordinary activities (1,086) (1,360)
----------------------------------------------- -------- --------
Reconciliation of effective tax rate:
2019 2018
GBP000 GBP000
---------------------------------------------- -------- --------
Loss before tax (5,085) (6,719)
Tax at UK corporation tax rate of 19% (2018:
19.17%) (966) (1,288)
Expenses not deductible for tax purposes 12 9
Enhanced relief for R&D (471) (580)
Unrelieved tax losses 320 478
Other 10 17
Adjustments in respect of prior period 9 4
----------------------------------------------- -------- --------
Total tax credit for the year (1,086) (1,360)
----------------------------------------------- -------- --------
The Group has accumulated losses available to carry forward
against future trading profits of GBP25,216,000 (2018:
GBP23,938,000). No deferred tax has been recognised in respect of
tax losses since it is uncertain at the Balance Sheet date as to
whether future profits will be available against which the unused
tax losses can be utilised. At the Budget 2016, the UK government
announced a reduction to the Corporation Tax main rate for the year
starting 1 April 2020, setting the rate at 17%. The estimated value
of the deferred tax asset not recognised, measured at this reduced
main rate of 17%, is GBP4,305,000 (2018: GBP4,075,000).
The decrease in the current year tax credit is due to a
decreased R&D credit, as a result of lower qualifying
expenditure during the year, reflecting management's decision to
reduce spend. The current year R&D credit has not yet been
approved by HMRC and, therefore, there is a risk that this claim
may not be successful.
Expenses not deductible include amortisation and impairment of
goodwill and intangible assets.
6. Loss per share
The analysis of loss per share is as follows:
2019 2018
---------------------------------------------- ----------- -----------
Earnings for the purposes of basic earnings
per share and diluted earnings per share,
being loss attributable to owners of the
Company (GBP000) (3,999) (5,359)
---------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purposes of basic earnings per share
and diluted earnings per share (number) 268,581,069 268,457,115
---------------------------------------------- ----------- -----------
Loss per share - basic and diluted (p) (1.49) (2.00)
---------------------------------------------- ----------- -----------
Diluted EPS is calculated in the same way as basic EPS but also
with reference to reflect the dilutive effect of share options in
existence at the year end over 18,996,500 (2018: 17,052,500)
ordinary shares. The diluted loss per share is identical to the
basic loss per share, as potential dilutive shares are not treated
as dilutive since they would reduce the loss per share.
7. Goodwill and intangible assets
Group Company
------------------------------- -------------------------------
Patents Patents
and and
Goodwill trademarks Total Goodwill trademarks Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- --------- ----------- ------- --------- ----------- -------
Cost
As at 1 February 2017 2,101 1,295 3,396 2,824 1,295 4,119
Other acquisitions -
internally developed - 5 5 - 5 5
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2018 2,101 1,300 3,401 2,824 1,300 4,124
Other acquisitions -
internally developed - 20 20 - 20 20
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2019 2,101 1,320 3,421 2,824 1,320 4,144
----------------------------- --------- ----------- ------- --------- ----------- -------
Amortisation and impairment
As at 1 February 2017 2,101 1,139 3,240 - 1,139 1,139
Impairment losses - 10 10 - 10 10
Amortisation charge
for the year - 16 16 - 16 16
As at 31 January 2018 2,101 1,165 3,266 - 1,165 1,165
Impairment losses - 19 19 - 19 19
Amortisation charge
for the year - 17 17 - 17 17
As at 31 January 2019 2,101 1,201 3,302 - 1,201 1,201
----------------------------- --------- ----------- ------- --------- ----------- -------
Net book value
As at 1 February 2017 - 156 156 2,824 156 2,980
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2018 - 135 135 2,824 135 2,959
----------------------------- --------- ----------- ------- --------- ----------- -------
As at 31 January 2019 - 119 119 2,824 119 2,943
----------------------------- --------- ----------- ------- --------- ----------- -------
Amortisation
Amortisation has been charged on patents for which the
registration process is complete, over the term granted.
Impairment testing
The Group carries out a review at each Balance Sheet date to
establish the economic value of each asset in the patent portfolio.
If the economic value of a patent is believed to be lower than the
carrying value, the carrying value is reduced accordingly. The
economic value is based on estimated future income potential taking
into account technical and commercial risks and external
information on the likely market demand and penetration for the
drugs for which the Group has patents.
The goodwill in the Company Balance Sheet arose following the
hive up of the trade and assets of InRotis Technologies Limited on
15 November 2007. The goodwill is allocated to the NDD activity of
the Group. In assessing goodwill impairment, recoverable amount is
based on fair value less costs to sell. The carrying value of
goodwill is compared to the market capitalisation of the Group as
part of the impairment assessment.
In considering the carrying value of goodwill, management have
not undertaken a discounted cash flow analysis on the basis that
there is limited historical basis for revenue assumptions, as such
the carrying value of goodwill is compared to the market
capitalisation of the Group as part of the impairment assessment.
At the Balance Sheet date there was GBP11,282,000 headroom, and
since the Balance Sheet date up to the date of approval of the
Annual Report and financial statements there has not been a
material movement in the share price.
8. Property, plant and equipment - Group and Company
Plant Fixtures
and
equipment and fittings Total
Group and Company GBP000 GBP000 GBP000
---------------------------------- ---------- ------------- -------
Cost
As at 1 February 2017 128 107 235
Additions 66 - 66
As at 31 January 2018 194 107 301
Additions 8 - 8
Disposals (4) - (4)
---------------------------------- ---------- ------------- -------
As at 31 January 2019 198 107 305
Depreciation
As at 1 February 2017 107 77 184
Depreciation charge for the year 30 16 46
As at 31 January 2018 137 93 230
Depreciation charge for the year 28 9 37
Eliminated on disposals (4) - (4)
---------------------------------- ---------- ------------- -------
As at 31 January 2019 161 102 263
Net book value
As at 1 February 2017 21 30 51
---------------------------------- ---------- ------------- -------
As at 31 January 2018 57 14 71
---------------------------------- ---------- ------------- -------
As at 31 January 2019 37 5 42
---------------------------------- ---------- ------------- -------
9. Capital and reserves
No. of ordinary
shares
2019 2018
Share capital '000 '000
------------------------------------- -------- --------
In issue at 1 February 268,531 268,426
Issued for cash 159 105
In issue at 31 January - fully paid 268,690 268,531
---------------------------------------- -------- --------
2019 2018
GBP000 GBP000
------------------------------------------ ------- -------
Allotted, called up and fully paid
268,689,878 (2018: 268,530,866) ordinary
shares of GBP0.001 each 269 269
--------------------------------------------- ------- -------
269 269
------------------------------------------ ------- -------
The Company has one class of ordinary shares, which carry no
right to fixed income.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR BZLLBKXFFBBL
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March 05, 2019 02:01 ET (07:01 GMT)
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